In my opinion and from a legal point of view, a genuine fractional ownership is the joint ownership of a Real Estate Asset In Pattaya.
There are several ways to accomplish this. For example, two or more people can get together and jointly purchase the asset or one person who already owns the asset, and one or more people may purchase shares on the property or one person who already owns shares in the asset may sell those shares. Then the operation may be structured with direct or indirect rights of ownership for the product.
For example, the co-owners may directly own the property, and their names may be entered as co-owners of the asset in the local Land Registrar. The co-owners may decide to form a company or a partnership, and the business or partnership would then own the asset, and each shareholder of the firm or member of the partnership would own a share of the company or partnership owning the asset.
Whether you are purchasing a property as a single owner or a co-owner, the situation is the same regarding critical issues and necessary precautions.
The difference lies in the fact that the buyer will have to consider the following additional matters: liability issues i.e. who is responsible for what and whether the buyer’s potential liability will be limited or excluded for the actions of other co-owners; exit issues i.e. how to exit and at what cost; whether partners have the right of first refusal in the event of resale; and management issues i.e. how the property will be managed, who decides what, how disputes will be resolved or how to protect against abuse from the majority of the other co-owners.
The buyers in a timeshare relationship don’t own the property. The owner is a service provider who sells the consumers a right to use the property on a weekly basis. In other words, a timeshare buyer doesn’t own the property or even a share of ownership, but only purchases a license to use the property for a limited period.
Timeshare issues are mostly contractual, so the questions buyers need to ask are:
How binding is the agreement?
How will my rights be classified in the case of bankruptcy of the property owner?
Are my rights fully transferable by succession or assignment?
And the list goes on…
Timeshare is cheaper than fractional ownership because the buyers only receive a right to use the property, not to own it. Also, time property is sold by the week, and customers may acquire only 1/52 or 2/52 rights to use while fractional ownership will be divided by the month or trimester.
In both cases, buyers need to check whether the country of destination has a particular law regulating fractional ownership or timeshare. In the absence of such laws, a lawyer can be asked to review whether the standard legal dispositions of this country cover all of the issues relevant to fractional ownership or timeshare.
My personal recommendation is that timeshare is more appealing than fractional ownership regarding common sense. It is a cheaper investment and buyers are often able to exchange right of use from one property to right of use in another or to share the period of use in one property against the utilisation of another.
The tenants of fractional ownership will point out that this method grants stronger rights on the property, and that buyers own a piece of it. However, just look at all the potential problems at the level of a co-owners housing association when all of the neighbours their own property.
Are you keen to repeat this experience at the level of one property only?
Owning a property is a costly investment and, because it is costly, a property should always be purchased in single ownership. Joint ownership should be reserved for within the family circle only.
I have no valuable insight to give you on this matter yet because fractional ownership and timeshare has only been founded in Thailand, and I haven’t had the opportunity to review an actual transaction yet.
Fractional Ownership vs. Timeshare in Pattaya